9 January 2022 0

Choosing The Right Business Bank Account

When you own a business that spends and accepts money, you need to set up a business account. Setting up an account can be a little confusing because there are many options available. Also, your business bank account protects you from legal issues and helps ensure you remain compliant. After opening your bank account, you will also find it can offer advantages for both your employees and customers, providing conveniences such as taking different forms of payment from customers or offering direct deposit for payroll.

Here’s how to choose the right business account for your needs.

Compare Fees and Benefits

Although your first instinct might be to go to the bank that houses your personal account, you should weigh your options. Banks offer many different benefits, and they also charge fees for many of their services. Therefore, it is important to compare fees and benefits before committing. These questions will help guide your decision:

  • Are there banks with introductory offers; if so, which ones are the best?
  • Are the offers temporary or will you enjoy the benefits indefinitely?
  • If the offers are temporary, what are the terms of the account once the offers end?
  • What are the interest rates offered for savings and checking accounts?
  • How much interest does the bank charge on their business lines of credit and credit cards?
  • What types of transaction fees do they charge? How much are they?
  • Does the bank charge termination fees?
  • Is there a minimum account balance? If the account drops below that amount, how much is the fee?
  • Do they charge a percentage for every transaction they process?
  • Do they charge fee for every credit card transaction?

Some banks also charge an Address Verification Service (AVS) fee to detect fraudulent behavior. There are also ACH daily batch fees when you complete transactions at the end of your business day and monthly minimum fees if you fail to meet the minimum, required transactions. All fees impact your bottom line, so it is important to balance the bank’s features and the fees they charge.

Consider a Payment Processing Company

You can also consider opening an account with a payment processing company. These companies are necessary if you complete payment processing transactions with your customers. Many offer new technology allowing you to use your phone to take credit payments, a great benefit if you offer COD payment options or provide a service that travels, such as a pop-up retailer or a service provider, such as a plumber. This service is in addition to your bank account where your payments are deposited.

What You Need to Open a Business Bank Account

Most banks make it easy to open an account online; however, you can also go into a branch. Either way, make sure you have the following documents with you:

  • Employer Identification Number (EIN) for all sole proprietors
  • Social security number (if you are a sole proprietor)
  • Business’s formation documents
  • Ownership agreements
  • Business license(s)

Some banks might require other documents, but these are typically the documents necessary to open a business account.
Opening your business bank account makes it easier to conduct business. It also offers access to advice regarding your business banking needs.

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By Demond Raybon

Demond Raybon is a motivated Technology Expert who creates strategic alliances with organization leaders to effectively align with and support key business initiatives. He also builds and retains high performance teams by hiring, developing and motivating skilled professionals. Demond is involved with developing the Infrastructure of small businesses and startups.

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